£36.6bn wiped off value of FTSE 100

A shares plunge wiped £36.6 billion off the value of the FTSE 100 as a global stock market slump saw it suffer its biggest one-day reverse in a year.

PUBLISHED: 19:20, Thu, May 23, 2013

Just a handful of leading London-listed companies saw share prices up on Thursday [PA]

The sharp 2.1% fall marked the end of a "giddy" spiral that had threatened to take the index to record highs despite the wider economy remaining relatively subdued.

Weak Chinese manufacturing data, hints that central bank support behind US growth will be scaled back and a 7% drop in the Japanese market the night before were to blame as London's leading shares index tumbled to 6696.8.

But analysts have been warning that the recent bull run of shares - which on Wednesday saw the FTSE 100 surge to its second-highest ever close - was bound for a correction amid the continuing malaise in the wider economy.

Wednesday night's closing figure of 6840.3 was just 90 points short of the index's all-time high finish in December 1999 when the dotcom boom saw it reach 6930.2.

But the picture changed dramatically on Thursday when just a handful of the leading London-listed companies saw share prices up, as traders moved en masse to cash in recent share price gains.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "Investors had been feeling a little giddy and, to some extent, were looking for an excuse to take profits.

"It is not necessarily negative that some pressure should be taken out of the tyres. Even factoring in today's drop, the FTSE 100 remains up 13.8% in the year to date, whilst nothing material has changed overnight."

Thursday's 2.1% fall was the largest since the same date in May last year when the FTSE 100 slipped 2.5% amid fears over a possible Greek exit from the euro.

Elsewhere, Germany's Dax fell by 2.1%, as did France's CAC 40. In New York, the Dow Jones was flat at the close of London trading after falling 0.5% on Wednesday.